Latest New Jersey Sports Betting Bill Includes Integrity Fee

Illustration of compass with INTEGRITY terxt

Three New Jersey Democratic assemblymen have introduced a new sports-betting regulatory measure, A3911. Unlike similar bills recently introduced in the state, A3911 includes a sports “integrity fee.”

This is the latest in a growing list of New Jersey sports-betting regulatory bills that anticipate a victory in the state’s US Supreme Court battle seeking to legalize such sports wagering. The measure, unlike similar bills up for consideration, includes an “integrity fee” to be assessed on future wagering action in the state.

The new bill, A3911, was introduced on Monday, April 30 in New Jersey’s Assembly. It has yet to be published in full, but a draft form of the bill that lacks the state-applied nomenclature has been published by the US-based Legal Sports Report.

Sponsoring A3911 are three Democratic Assembly members, Eric Houghtaling, Joann Downey, and John Burzichelli. As chairman of New Jersey’s Assembly Appropriations Committee, Burzichelli has been involved with moving other gambling-related measures through the state’s legislature in recent years.

A real integrity fee

While “integrity fees” have popped up in sports-betting bills recently introduced in several other US states, the one in A3911 is different. First, the integrity fee, as included in other states’ bills, isn’t an integrity-based surcharge at all; instead, it’s an intentionally misnamed licensing fee being lobbied for by the US’s prominent professional sports organizations.

Given that these same pro sports leagues (NFL, MLB, NBA and NHL) are New Jersey’s opponents in the ongoing “Christie II” US Supreme Court battle over sports betting’s possibly legal future, it’s no surprise that other New Jersey bills have omitted such possible payments to the leagues.

A3911’s integrity-fee clause, called the “Sports Wagering Integrity Fund,” allows for some money to go to the leagues. However, they’d have to get in line, applying for reimbursement for incurred expenses and damages only after New Jersey’s own expenses for any integrity-related investigations have been covered.

A3911 includes some advance-planning overhead for expenses likely to come New Jersey’s way. According to the draft measure:

b. Moneys deposited in the “Sports Wagering Integrity Fund” shall be used by the division and any other law enforcement agency delegated by the Attorney General to recoup the costs and expenses of any investigation regarding the integrity of sports events upon which wagers are placed through a New Jersey sports pool or online sports pool. Eligible expenses shall include, but not be limited to:

(1) integrity monitoring expenses;

(2) public relations expenses associated with integrity issues;

(3) personnel costs associated with the establishment of a sports wagering integrity unit within the division; and

(4) any other eligible expenses approved by the Attorney General.

Only after that would the leagues themselves be eligible to seek any remaining balance in the integrity fund. The sports’ governing bodies would have to submit a claim to New Jersey’s Attorney General to be eligible for any reimbursement.

Integrity fund includes cap

The integrity fund called for by A3911 would be capped, with the funding to come from New Jersey’s existing casinos and racetracks. Mobile and online wagering through sites offered by these licensed providers would also be allowed.

Each licensed operator would be assessed an annual integrity fee “equal to the lesser of $7.5 million [£5.5m] or 2.5% of that portion of gross gaming revenue attributable to wagers on sports events made [through approved channels].” The percentage portion of the cap would be boosted to 3% in the unlikely event that the US’s Internal Revenue Service (IRS) entirely drops its rules that relate to revenue earned from sports wagering by operators.

As expected, and in accordance with other New Jersey sports-betting bills, all such wagering services would fall under the oversight of the New Jersey Division of Gambling Enforcement (DGE). The DGE already oversees all other gambling in the state, including the burgeoning online activity that was legalized earlier this decade.

One other provision in the draft copy of A3911 deserves mention. The bill’s authors are seeking to protect the state’s land-based casinos and racetracks by seeking to tax online wagering at a higher rate. A3911 would call for land-based sports wagering to be taxed at a modest 8% rate on GGR. For online/mobile, however, that rate would be bumped to 12.5%.

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